Supermarket bank branches

30 October 2023

19

Supermarket bank branches

The article discusses the trend of American banks closing branches located within supermarket chains at a much faster rate than other branch locations. This trend has been driven by several factors, including the industry’s profit squeeze and customers’ increasing adoption of digital banking channels.

Key points from the article:

1. Banks closed 10.7% of their in-store branches in the year ending June 30, which is significantly higher than the closure rate for other branch locations (1.4%) during the same period.

2. Most in-store branches in supermarkets are operated by regional banks, which have been facing challenges in the wake of the March collapse of Silicon Valley Bank.

3. Some of the major banks that closed the most in-store locations during the 12-month period include PNC, Citizens Financial, and U.S. Bank. These closures often occurred within supermarket chains like Safeway and Stop & Shop.

4. Walmart houses the most bank branches within its stores, with 1,179 branches, according to an S&P Global report.

5. The closure of in-store branches within supermarkets accelerated sharply in 2021, mainly due to the impact of the COVID-19 pandemic, which expedited the adoption of mobile and online banking.

6. Banks are looking to shrink their branch networks, focusing on closing less-profitable branches with lower customer traffic and fewer high-net-worth accounts.

7. The article notes that banks initially started building branches within supermarkets in the 1990s because they were cheaper to set up. However, they now see branches as places to offer a broader range of financial services, including wealth management accounts, credit cards, and loans.

8. Although the pace of closures has slowed since the peak in 2021, it remains higher than pre-pandemic levels. In 2019, banks closed 4.2% of in-store locations and 1.7% of other locations.

9. This trend is occurring as the banking industry adapts to higher funding costs, as customers move their balances to higher-yielding options like money market funds.

The banking industry’s shifting approach to branch banking and the impact of digitalization have led to a significant reduction in in-store branches within supermarket chains. Customers are increasingly using digital channels for their banking needs, which is driving this change in the industry.

Title: The Decline of In-Store Bank Branches within Supermarkets – FAQs

Introduction:

The closure of in-store bank branches within supermarkets has been a noticeable trend in the American banking industry. This shift has been driven by various factors, including the impact of the COVID-19 pandemic and the industry’s evolving approach to branch banking. In this article, we’ll address frequently asked questions (FAQs) about the decline of in-store bank branches within supermarket chains.

1. Why are American banks closing in-store branches in supermarkets?

Banks have been closing in-store branches in supermarkets at a rate significantly faster than other branch locations due to a combination of factors. These include profitability concerns, changing customer preferences towards digital banking, and a focus on streamlining branch networks.

2. How many in-store branches have closed, and what’s the comparison with other branch closures?

According to data from the Federal Deposit Insurance Corporation (FDIC), banks closed approximately 10.7% of their in-store branches in the year ending June 30. In contrast, the closure rate for other branch locations during the same period was only 1.4%.

3. Which banks have closed the most in-store branches, and where were these branches located?

Some of the major banks that closed the most in-store locations in the 12-month period included PNC, Citizens Financial, and U.S. Bank. These closures were typically within popular supermarket chains like Safeway and Stop & Shop.

4. How many bank branches does Walmart house, and why is this significant?

Walmart currently hosts the most bank branches within its stores, with 1,179 branches. This is noteworthy as it reflects the trend of banks establishing branches within major retail chains to reach a broader customer base.

5. What accelerated the closure of in-store branches in 2021?

The closure of in-store branches within supermarkets accelerated sharply in 2021, primarily due to the COVID-19 pandemic. The pandemic expedited the adoption of mobile and online banking, prompting banks to reevaluate their branch network strategies.

6. What is the primary reason for closing in-store branches within supermarkets?

Banks initially established in-store branches within supermarkets because they were cost-effective. However, today, the industry sees branches as opportunities to provide a wider range of financial services, including wealth management accounts, credit cards, and loans, rather than just places to withdraw money.

7. Has the pace of closures slowed down, and how does it compare to pre-pandemic levels?

While the pace of closures has moderated since the 2021 peak, it remains higher than the levels before the pandemic. In 2019, banks closed 4.2% of in-store locations and 1.7% of other branch locations.

8. How have changing customer deposit habits influenced this trend?

Banks are adapting to higher funding costs as customers shift their balances to higher-yielding options like money market funds. U.S. banks registered a 15% decline in deposits from in-store branches, while deposits at other branches fell by 4.7% in the year ending June 30, according to the FDIC.

Conclusion:

The trend of American banks closing in-store branches within supermarket chains reflects the evolving landscape of banking. As customers increasingly embrace digital banking options, banks are reevaluating their branch network strategies, focusing on profitability and the delivery of a broader range of financial services. This trend, accelerated by the COVID-19 pandemic, continues to shape the future of banking in the United States.
Title: The Decline of In-Store Bank Branches within Supermarkets – FAQs